Workplace gossip has moved beyond the water cooler into cyberspace, combining with high unemployment and increasing damages awards—not to mention Minnesota’s somewhat unique theory of compelled self-publication—to heighten the potential for defamation claims arising from the workplace.

Anecdotal evidence suggests the use of email and social media is increasing the potential for defamation claims arising out of the workplace. Never before has it been so easy to have a career smeared so publicly and so quickly. High unemployment has also raised the stakes for litigation involving one’s professional reputation. Many litigants decide to sue after they are unsuccessful finding a new job and feel they have no other choice. The majority of these cases are dismissed at the summary judgment stage. Those that survive dismissal, however, can lead to unpredictable results, and two recent defamation verdicts in Minnesota were for $1 million each.1

Defamation claims arising out of the workplace present special challenges for both plaintiff and defense counsel. An employee might assert a defamation claim based on the stated reason for her termination, which she believes is false, whether the reason is communicated to another person within the company, to a potential new employer in the context of a reference, to the world at large, or even only to her (under a theory of compelled self-publication). Employees also sometimes sue coworkers for defamation.2 Professionals (like doctors and lawyers) also run the risk of being anonymously “rated” by clients or members of the public on online evaluation sites.3

Elements of a Defamation Claim

To establish a claim for defamation, a plaintiff must demonstrate the following elements: (1) a defamatory statement; (2) published to a third person; (3) which is false; and (4) that tends to harm her reputation and to lower him in the estimation of the community.4 The statute of limitations for defamation claims in Minnesota is two years.5

Defamation must be pled with “particularity.”6 Where the complaint fails to identify the speaker, the statements, the context and time in which they were made and to whom they were made, a defamation claim is properly dismissed.7 Under the specificity requirement, the actual defamatory language must be set forth in the pleadings and cannot be merely paraphrased.8 A defamation claim which fails to set forth the exact defamatory communication and the “who, what, why, where and when” may, therefore, properly be subject to a motion under Rule 12 for dismissal or a more definite statement.

Qualified Privilege

The most commonly litigated issue in workplace defamation cases is whether the defendant acted out of malice so as to defeat the conditional privilege surrounding most employment matters. A “conditional privilege will virtually always attach, as an initial matter, to statements made about employees[.]”9

Because defamation traditionally requires a communication to a third-party, the question may arise whether an internal corporate communication is sufficient to establish this element of a defamation claim. In Frankson v. Design Space International, however, the Minnesota Supreme Court held that “treating intra-corporate communications as publications that may be qualifiedly privileged, is the better view.”10 In other words, instead of deciding whether a communication between corporate executives about an employee of the corporation is a communication to a “third party,” Minnesota law generally assumes it is, and focuses on the qualified privilege.

An allegedly defamatory statement is protected by a qualified privilege if the statement was made in good faith and upon a proper occasion, from a proper motive, and was based on reasonable or probable cause.11 The concept of qualified privilege is often applied to communications between former and prospective employers about employees. The concept is broader, however, and can be asserted in any context where the speaker had a legitimate purpose and good faith.

[A]n employer called upon to give information about a former employee should be protected so that he can give an accurate assessment of the employee’s qualifications. It is certainly in the public interest that this kind of information be readily available to prospective employers, and we are concerned that, unless a significant privilege is recognized by the courts, employers will decline to evaluate honestly their former employee’s work records.12

Minnesota appellate courts have repeatedly and consistently recognized a qualified privilege with regard to communications by an employer about an employee relationship.13 A qualified privilege, however, can be defeated by a showing of “malice.” Malice has been defined as “actual ill will, or a design causelessly and wantonly to injure plaintiff.14 Because a requirement of a qualified privilege is that the statement be made in good faith, this can be seen as the flip side of the same coin.

Workplace defamation litigation therefore follows a ping-pong-like pattern starting with plaintiff’s complaint of defamation, then defendant’s assertion of a qualified privilege, next plaintiff’s claim of malice, and finally defendant’s motion arguing that there is no evidence of malice. There are various means of establishing facts to show “malice.” Where there is an accusation of theft, misconduct, or a crime committed on the job an employer may be barred from invoking the qualified privilege if it did not conduct an investigation.15 The second method to determine if a defendant acted out of malice or knew the statement was false is look for “extrinsic evidence of ill feeling, or intrinsic evidence such as exaggerated language or the extent of publication.”16

Whether the defendant acted out of malice may be appropriate for summary judgment. Plaintiffs often argue that the question of malice should go to the jury. A court need not submit the question of whether malice exists to a jury, however, “in situations where the totality of the evidence does not support a finding of malice.”17 As the Minnesota Court of Appeals has noted: the “assertion that the issue of malice is always a jury question is without merit.”18

Compelled Self-Publication

Minnesota is one of a minority of states that recognizes the doctrine of self-publication where the “plaintiff was compelled to publish a defamatory statement to a third person [and] it was foreseeable to the defendant that the plaintiff would be so compelled.”19 This holding seemingly opens the door for any terminated employee to file suit for a slanderous statement, even if it was communicated only to them. As a practical matter, however, few plaintiffs have successfully exploited this narrow doctrine and courts have construed it narrowly.20

In recognizing the doctrine of compelled self-publication, the Minnesota Supreme Court stated:

We acknowledge that recognition of this doctrine provides a significant new basis for maintaining a cause of action for defamation and, as such, it should be cautiously applied. However, when properly applied, it need not substantially broaden the scope of liability for defamation. The concept of compelled self-publication does no more than hold the originator of the defamatory statement liable for damages caused by the statement where the originator knows, or should know, of circumstances whereby the defamed person has no reasonable means of avoiding publication of the statement or avoiding the resulting damages; in other words, in cases where the defamed person was compelled to publish the statement. (emphasis added).21

Statutory & Other Defenses

The Minnesota legislature, recognizing that employers are wary of potential defamation claims by employees or former employees, has taken steps to provide protection from this type of litigation. This has created a number of statutory defenses to defamation claims by employees. These statutory limitations, all located in Chapter 181 of Minnesota Statutes, are sometimes overlooked, but are critical to any discussion of defamation in the workplace. These statutes may be underutilized, however, because they are either cumbersome or limited to narrow circumstances.

First, Minn. Stat. §181.962, Subd. 2 limits defamation claims based on the content of an employee’s personnel file. It provides, in part, that “No communication by an employer of information contained in an employee’s personnel record after the employee has exercised the employee’s right to review pursuant to section 181.961 may be made the subject of any common law civil action for libel, slander, or defamation” unless the employee has disputed information and the employer has either refused to remove or revised the information or refused to allow the employee to provide a position statement in the file.22

Second, Minn. Stat. §181.967, Subd. 2 limits an action against an employer by an employee or former employee based on an employee reference made to a prospective employer or employment agency, unless the employee or former employee demonstrates by clear and convincing evidence that: 1) the information was false and defamatory; and 2) the employer knew or should have known the information was false and acted with malicious intent to injure the current or former employee. The “references” must fall within the definition provided in 181.967, Subdivision 3 which is limited to:

Dates of employment;

Compensation and wage history;

Job description and duties;

Training and education provided by the employer; and

Acts of violence, theft, harassment, or illegal conduct documented in the personnel record that resulted in disciplinary action or resignation and the employee’s written response, if any, contained in the employee’s personnel record.

A disclosure under clause (5) must be in writing with a copy sent contemporaneously by regular mail to the employee’s last address.

Finally, if an employee requests a letter stating the truthful reason for her termination pursuant to Minn. Stat. §181.933, the letter furnished by the employer cannot be the subject for any action for libel, slander or defamation by the employee against the employer.23

Truth is always a defense.24 Defamatory statements are also considered privileged and therefore not actionable if the plaintiff consents to their publication.25 Depending on the alleged defamatory statement in question, a defendant may attempt to argue that the statement is one of “opinion” not “fact. According to commentary in the Minnesota Jury Instruction Guides, “[t]he cases [in this area] are difficult to reconcile and must be examined carefully.26 Indeed, in one case the Minnesota Court of Appeals stated that Minnesota law “makes no distinction between ‘fact’ and ‘opinion.’”27 Other appellate court decisions have held that only statements that “suggest verifiable false facts” are actionable.28

Damages Issue Unsettled

Under the common law, there are four categories of slander per se: statements that falsely (1) accuse a person of a crime, (2) accuse a person of having a loathsome disease, (3) accuse a person of serious sexual misconduct or “unchastity,” or (4) accuse a person of improper or incompetent conduct regarding a person’s business, trade, or profession.29 In employment cases, category (4) regarding a person’s business, trade or profession is most commonly relied upon, and attorneys sometimes misapprehend what “per se” defamation means. It does not mean, for example, that the claim automatically survives summary judgment and it does not mean that the plaintiff automatically receives an award of damages or some pre-set amount of damages. Defamation “per se” simply means that the plaintiff need not show the existence of some harm or damage as an element of the claim. Under Minnesota law, libel of any kind is actionable “per se.”30 Most defamation litigation these days probably involves libel of some kind and therefore proving the existence of harm is rarely an issue.

So what is the measure of damages in a defamation case? Both plaintiff and defendant are likely to ask their counsel how much a potential verdict might be. The answer is generally that it is up to the jury and therefore there is little predictability. A few recent cases in the news, however, suggest that large verdicts are on the increase.31

The tale of one prolonged defamation case shows how unpredictable and unsettled the issue of damages is in these cases. On August 3, 2010, the Minnesota Court of Appeals issued a decision in Longbehn v. Schoenrock, a case which started in May of 2001, and remanded it for a fourth trial.32 The decision followed two previous appellate decisions, one published and one unpublished.33 The case, in all of its permutations, highlights the confusion regarding damages for defamation claims and the particularly the concept of defamation per se.

Patrick Longbehn was a 34-year-old police officer with the City of Moose Lake who was terminated on January 25, 2001. Because he was dating an 18-year-old woman, certain individuals, including Schoenrock, had referred to Longbehn as “Pat the Pedophile.” Because this nickname was raised in connection with his termination, Longbehn sued the city and various individuals for defamation. The case first went to trial in August 2003 but the district court dismissed the case without submitting it to a jury. On Longbehn’s first appeal the court of appeals reversed dismissal and remanded for a new, second trial.34

In the second trial, the jury found in favor of Longbehn on the defamation claim and awarded $230,000 for past and future harm to reputation, mental distress, humiliation, and embarrassment; $3,000 for future health care expenses; and $90,000 for past and future wage loss. Defendant Schoenrock moved for judgment as a matter of law and the district court granted his motion, concluding that Schoenrock’s statement was not defamatory per se. The district court also concluded that the evidence was insufficient to support an award of general damages.

On review for the second time, the court of appeals concluded that the statement was defamatory per se because it implicated the commission of a crime.35 The appellate court also concluded that Longbehn could recover general damages without proving that the defamatory statement caused him actual harm, but that the jury’s award far exceeded the amount that would normally flow from a publication of this kind and remanded for a third trial. The case went to trial a third time on May 2009. This time the jury awarded zero damages. On appeal, Longbehn challenged the jury instructions and special verdict form used at the third trial and, in Longbehn III, the court of appeals once again weighed in and found that the instructions were erroneous and remanded for a fourth trial.

The court of appeals in Longbehn III instructed the district court to strike parts 1, 2, 3, and 4 of the special verdict form, as set forth in the court’s opinion, and to use only the following:

5. What amount of money will fairly and adequately compensate the Plaintiff for damages caused by the Defendant’s use of the defamatory nickname on the one isolated occasion:

a. Harm to his reputation and standing in the community.

b. Mental distress.

c. Humiliation.

d. Embarrassment.

The appellate court instructed that “when a statement is defamatory per se, as is the case here, general damages are presumed, and thus a plaintiff may recover without any proof that the defamatory publication caused him or her actual harm.”36 The court opined that the stricken portions of the special verdict form which, among other things, emphasized that the defendant only used the nickname “on one isolated occasion” and that he was commonly known by the derogatory nickname were improperly “argumentative.”

The court also held that evidence of plaintiff’s preexisting reputation was relevant and probative, citing a treatise for the provision that “if the defamation plaintiff has already a bad reputation on the topic involved in the defamation, her damages are at least arguably less than if she enjoyed a good reputation or no reputation at all.”37 This latter point highlights a potential defense at trial, if not summary judgment, of a preexisting bad reputation and a potential area of discovery by defendants in defamation claims. Some people have such a poor reputation that they cannot be defamed.

In a dispute between two business competitors,38 the court of appeals affirmed a trial court judgment for $0 in compensatory damages and $30,000 in punitive damages. The defendant argued that the Supreme Court had previously held that, except in rare occasions, punitive damages must be within a single digit ratio of the actual damages. Here, where the actual damages were zero the ratio was not met. The Minnesota Court of Appeals held that the rule is not so strict when the actual amount of punitive damages is reasonable under the circumstances.

This decision, however, when compared to the Schoenrock trilogy, raises further confusion about how to plead, measure, and award damages for defamation per se, because the defendant in that case acknowledged that it “did not suffer any actual damages” as a result of plaintiff’s actions. Because the actions, including breach of a contractual nondisparagement clause, were clearly wrongful, however, the district court apparently resolved the contradiction by awarding punitive damages. One could read Schoenrock to stand for the proposition that actual damages are not required (although they are available if the evidence supports them) and the court should award presumed damages, not punitive damages. Reading all of these cases together, it appears a plaintiff can potentially seek presumed damages, actual damages and punitive damages, depending on the facts.

Conclusion

The workplace is fertile spawning ground for defamation claims. Minnesota’s minority position allowing compelled self-publication increases the potential for claims in this area. Both the courts and the legislature, however, have recognized public policy reasons to provide a cloak of protection for employers who act in good faith.

V. John Ella is of counsel to the Minneapolis office of Jackson Lewis LLP. He practices in all aspects of employment law and advises clients in the areas of employment contracts, handbooks, sexual harassment claims, discrimination, trade secret and noncompete litigation, drug testing law, plant closings, ERISA benefits litigation, wage and hour compliance, commission claims, defamation, whistleblower and Sarbanes-Oxley claims as well as closely held corporation and partnership disputes. He is certified by the Minnesota State Bar Association as a Labor & Employment Law Specialist.